The Numbers On The Trading Platform

Video Transcription:

Hello, traders. Welcome to the Stock Trading course and the third module, “How the Stock Market Works.” In this lesson, we’re going to have a quick lesson on Level Two. Because it’s important for you to understand what all the numbers on the Level Two mean and how you’re going to use them with the help of the time and sales. So, we’re going to go to the Think Russian platform, because here we have a nice Level Two and we are going to learn how to use it. Now, the first thing you have to understand is that the ask size and the bid size on the Level Two are in lots. And one lot is equal to 100 shares of the company we are looking at. In this case, Apple.

If you take, for example, here the best beat at 14. Let’s grab another example, okay? Right here, at the 110.03 level, we have seven large. Which means that we have 700 shares of Apple, at that time, in the Level Two. At 700 shares of Apple at 110 dollars is about 77. Well, it’s exactly 77,000 dollars going on the ask on the bat exchange. And right here, you can see that we have all the exchanges available for you to trade with Apple. Now, the first thing you have to notice here is this huge blocker here. At the 10982 level now. You can, if we would zoom out on this chart, the 182 level. Well, let’s go to another, a higher time frame. Maybe the fifteen minute and let’s look at the 10982 level.

10982 level. The 10982 level is right here, which is about the previous low. So, this can mean that we have a real bid here, at this level, to buy the dip or this is just profit take-in from this flush, early in the day. You can’t know for sure, what this bid is doing here and if it’s a profit take-in or an actual bid to buy this stock. But it’s going to be very hard for Apple to break through the 10982 level, if it get’s there. Okay? Now, you can see that on the ask side, we are in a down movement. Okay? And you can see that on the ask side, we don’t have as much weight as on the bid side. Okay? You can see that we have changed it from 18 large, 10 large. Right here we have one large, one large on these exchanges.

Well, what you need to understand from what’s going on here is that all these bids are getting eaten. Meaning that if you look at the time and sales, everything is red. You can see right here that the trade sizes are kind of large and we are approaching that level. And the big bid at the 10989 level disappeared, which means that it can be one of two things. Just big money flashing. Big money flashing, big sizes for in order to stop the flash. So, that the bear pressure was going to possibly break that level. So, they decided to diminish their bid, but that doesn’t matter.

What matters is that what you need to understand about the Level Two is that when price is going down, you are going to see the bid size getting eaten or getting swept by sellers. And when price is going up, you are going to see the ask price getting swept. And when I say getting swept, I mean that the price levels are continuously going to change to the downside, when price is going down. And to the upside, when price is going up. Now, let’s have a more closer look at the Apple chart today. Here’s the one minute chart. We’re going to zoom in, right here. The level to break is the previous level at 10976. We don’t have actually big bids on the 10976 level, but we do have some big bids on the 10980 level, right here.

If the 10980 level breaks, which it did just now, and we have big bids at the 10978, which it breaks, we have big bids at the 10977, which it broke. And now, we have made a new low at 10975. And we have a big bid at 10975, that got filled and pushed price up. And this is how you are going to be reading Level Two. And well, you have to get used to it, if you are going to be scalping the markets or scalping stocks on a daily basis. But, with practice, you are going to learn how to spot nice levels to get in and nice levels to get out.

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